Saturday, May 10, 2014

Was Stanford's Decision To Sell Its Fossil Fuel Industry Stocks Futile?

An economist from the business school at UCLA explains why Standford's divestment decision was futile.  He correctly argued that selling its fossil fuel industry stocks would not reduce the value of the stocks.  Consequently, it would not have any effect on the industry.  Moreover, even if other elite universities followed Standford's example, it would have no effect on the industry.  It would be better to follow the example of financial investors who accumulate stock in order to have a bigger impact on management.  One could argue that Stanford's action might have some value if it sent a moral signal to management that changed its behavior.  However, research that he conducted on apartheid in South Africa showed that moral signals had no influence on the government's decision to end apartheid.

The comments that follow the article reflect the differences of opinion that exist about protest movements.  Some agree with the conclusions of the professor.  Others argue that the behavior of elite universities does more than send a moral signal to the rest of society.  It demonstrates that student protests can influence the behavior of elite institutions.  That alone is a worthwhile objective because it shows that student demonstrations made a difference at Stanford.  That can encourage students at other universities to become more active in support of initiatives that send an important message to society.  It is a message that change is not impossible.

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